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Outlook:  Energy futures are trading lower this morning despite the bullish reinforcement from yesterday’s API report showing larger than expected product draws. Supply disruptions from Hurricane Ida seem to be battling against continued uncertainty with Covid. Weakness also stems from reports that China will be releasing state crude oil from its reserves for the first time. Traders will look to see if the EIA confirms these large draws this morning, with a majority of the focus on product markets. Additionally, much of U.S. offshore production remains offline, and if this continues for an extended period, we expect to see further support brought into the markets.

Crude

• U.S. jobless claims totaled at 310,000 for the week ended Sep 4, the lowest total claims seen during the pandemic era.
• Gulf of Mexico crude production was reported at 77% shut in as of Tuesday, GOM production accounts for 17% of total U.S. production.
• Yesterday afternoon the API reported that U.S. crude inventories fell by 2.9 million barrels compared to the estimated 4.6 million barrel draw. Refinery utilization is expected to fall by 4.9% to 91.3%.
• Protestors were seen blocking a tanker from being loaded at Libya’s Hariga oil terminal today, after blocking exports at ports of Ras Lanuf and Es Sider on Wednesday.
• The October crude oil contract is trading $1.23 lower at $68.07. The 20-day and 100-day moving averages are $67.52 and $67.64 respectively. The 14-day RSI is 49.25%.
• As of 8:30 am CST: October Brent is down $1.22 at $71.38 and the U.S. dollar index is 0.143 lower at 92.510 while the nearby e-mini S&P 500 futures contract is down 2.75 points at 4509.75.

Diesel

• This week’s API inventory report showed a large draw of 3.75 million barrels, exceeding expectations of a 2.6 million barrel draw.
• India’s diesel consumption in August rose by 15.7% compared to 2020, but fell by 8.6% from July.
• The October ULSD contract is trading $0.0353 lower at $2.1011. The 20-day and 100-day moving averages are $2.0827 and $2.0765, respectively. The 14-day RSI is 50.30%.

Gasoline

• Yesterday the API reported that they saw gasoline inventories down by a massive 6.4 million barrels, larger than expectations of just 3.4 million barrels.
• Exxon’s Baton Rouge facility plans to complete its restart this week, but will not resume full operations until it can receive adequate crude supplies.
• The October RBOB contract is trading $0.0360 lower at $2.0961. The 20-day and 100-day moving averages are $2.0848 and $2.0430, respectively. The 14-day RSI is 49.52%.

Propane

• Analysts expect this morning’s inventory report to show a build of just 727,000 barrels due to Hurricane Ida impacts. Some analysts however believe that hurricane related export delays at the Gulf may lead to a larger than expected build in stocks.
• At last look, Conway propane was trading up $0.00500 at $1.19750. Mt. Belvieu was trading unchanged at $1.19250.